Hello, wrb2219-ga!
Don't get too worried about this one! It is really quite easy. Both
my husband and I have been self-employed most of our working lives,
and have been through every tax form one can think of regarding
general contracting, self-employed contracting, corporate taxes, etc.
It also helps that my Dad was a high-profile account for large
corporations for many years! It's not the best when you have to always
have your father help on tax returns in the early years of marriage,
because they always find out how much money you "are not" making!!!
Anyway, to get to your question...
When you are taking a temporary job, and are not considered a regular
employee of an individual or company, the IRS considers that
"self-employment." This would be the case for any individual, even if
they had a regular, 9-5 job with an employer and then took a
"consulting" job on the side. The "consulting" job would be considered
"self-employment."
Whether the "self-employed" job is out-of-state is not really an
issue. An example:
All Google Answers researchers are "self-employed" in their status
here at Google, even though we live all over the world.
The bottom line is, the person who employed you in the other state,
if responsible, should have gotten your name, social security number,
and had you fill out a W-9 which provides them with the information to
fill out and send you your 1099 at the end of the year.
It is the employer's responsibility to fill out the 1099 and send a
copy to the IRS and a copy to you! You do not fill out your own 1099!
At tax time, you need to fill out a Schedule C along with your 1040
tax return. The schedule C is extremely easy to fill out, and it will
provide lines for you to list all your expenses associated with the
job. For instance, you will be able to deduct your gas mileage for
driving to and from the out-of-state job, your rent, etc.
A copy of the 2002 Schedule C can be seen here:
http://www.irs.gov/pub/irs-pdf/f1040sc.pdf
You may even be able to fill out the Schedule C EZ which is found
here:
http://www.irs.gov/pub/irs-pdf/f1040sce.pdf
These forms will be included in the normal 1040 tax packet you can
find in libraries and post offices at tax time. In lieu of that, you
can always go to the IRS website and download the forms, which will
probably consist of the 1040 and the Schedule C for you.
The IRS site is at http://www.irs.gov/
From the IRS site, merely type in the form you want to see under
"Search forms and publications."
If your out-of-state "employer" does not send you a 1099, you can
assume two things:
He has sent the income information to the IRS but forgotten to send
it to you.
He has not sent anything to the IRS.
Then, it is up to you to remember what you earned and fill out a
Schedule C anyway. Now, does everyone do that? NO! But, that is a
matter of individual conscience, and I highly recommend you don't get
in the habit of not reporting income. If the IRS ever decides to audit
you, don't forget that they know how much money you have deposited in
the bank according to interest earned, how much you have put in IRA
accounts, how much you have been spending on mortgage, etc. If they
want to investigate where your money is coming from, they will!
I hope I have answered your question. If you are still unclear about
this information, don't hesitate to ask in an answer clarification,
and I will be glad to assist your further.
umiat-ga |
Request for Answer Clarification by
wrb1129-ga
on
07 Dec 2002 17:24 PST
I went thru an agency who paid me weekly and told me that they would
send me a 1099. I understand that part. I guess I didn't clarify
myself. Sorry. I was told by some of the other contractors, that
worked at the same company, to keep all of my receipts, since I was
working out of state that I could claim all expenses. This is where I
am having the problem. The IRS told me that a contractor was the same
as self employed. I downloaded the publications he told me and I read
them. This is where I was confused. Where does it tell me as a
contractor, what I can use for deductions. Like I said, these
contractors told me I could deduct all expenses. Where do I go to
find this information. I didn't want to pay $100.00+ and go to a tax
advisor. Surely there must be some web site or other that I can look
at that will step me thru this process. I need some HELP!!
Thanks
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Clarification of Answer by
umiat-ga
on
08 Dec 2002 19:28 PST
Hi, wrb2219-ga!
All you need to do to figure out what expenses you can deduct is to
look at the instructions for the Schedule C, found on the www.irs.gov
website. The instructions are here:
http://www.irs.gov/pub/irs-pdf/i1040sc.pdf
You will find most of the information you can deduct under
"Expenses." The instructions will tell you, line by line, what you can
deduct for you job out of state. For instance:
Line 10 - Vehicle expenses
If you have the actual receipts, or can make an accurate guess on
mileage, you can deduct your driving expenses to and from the other
state, as well as your expenses driving back and forth to the job
site. You can deduct vehicle maintenance expenses such as repairs,
gas, oil, etc.
Line 20 -
You can deduct cost of renting tools, if you needed something for
that particular job.
Line 21 - Repairs of tools
For instance if a nail gun goes on the blitz, and you need to take
it in to be repairs, that is a deduction.
Line 22 - Cost of supplies
The cost of nails, hammers, tools of all kinds that pertain to your
job may be deducted. Even work clothes, if you use them exclusively
for the job, can be deducted.
Line 24A - Rental expenses
Where did you live during your 2-month job? If you stayed in a
hotel, or rented an apartment, you can deduct those expenses,
providing you have a regular home in another state. If you are merely
drifing around the country in search of odd jobs, this would not
apply.
Line 24B - Cost of meals
While working out of state, you can deduct all your groceries and
meal expenses.
You may also read JKLassers Income Tax Guide, which always has a
good section on deductions for self-employment. You should be able to
find it at the library or look through it in the bookstore.
There are many ways to be creative in your deductions....but not
outrageous. Just make sure you do have your receipts. If not, you may
have to opt out of some deductions, or come up with some other way to
document your expenses.
Don't worry! With the 1040 combined with the Schedule C, you should
be fine and will be a pro at filling these forms out in not time!
umiat
|
Request for Answer Clarification by
wrb1129-ga
on
09 Dec 2002 09:18 PST
Thanks for the info, it REALLY helped. I have read the instructions
for Schedule C several times. I see part V (Other Expenses). It
tells me to list other expenses, but then it says do not list personal
or living expenses. If this is the case, then why are 3 difference
contractors that use 1009's telling me that I can expense ALL items.
I am talking about clothes bought, dry cleaned and washed and dried,
about keeping my vehicle clean, sundries and new electric razor, post
office box rental, maps and office supplies. Yes, I had to buy my own
office supplies. If I can get this answered, then I am all set.
Thanks much!!
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Clarification of Answer by
umiat-ga
on
09 Dec 2002 13:49 PST
Hi, again!
Don't rely on other contractors, friends, or even the IRS to give you
accurate information! We have been audited many, many times, and even
IRS agents give us contradictory information!
Yes, you can expense office supplies if they relate to your business.
If you have to by a computer, buy paper for invoices, bills, pens,
etc....all of that is a legitimate expense.
You may deduct clothing expenses if you truly only wear them for your
job...for instance, insulated carhart coveralls, etc. If you are
wearing expensive office shirts and must have them dry-cleaned while
out of living out of town (or at home, for that matter) you can deduct
those expenses.
An electric razor? No, I think that is stretching it! Otherwise, you
could deduct shampoo, toothpaste, deoderant, and every other personal
hygeiene expense, as well as dish-washing liquid, laundry soap, etc.
Remember, you don't automatically deduct things that you would use in
the ordinary course of living.
The reason you don't put personal living expenses like rent and meals
under "other expenses" is because they go on lines 24a&b.
As a matter of fact, I would list anything like special clothing,
office supplies, etc. under Line 22, cost of supplies. The more you
can list under that category for your work-related expenses, the
better.
Cleaning out your car.......NO! Even if you don't do that at home, it
is not strictly related to your business. Otherwise, I'd be at the
car-wash all the time so I could expense it.
The "other expenses" line is truly for items that don't fit in the
other categories. For instance, you could list your post office box
rental there while out of town.
As a matter of fact, when you do your taxes, you may even find a
place to deduct the expense of this Google answer!
Now, off to that shoebox of receipts that you have!!!
umiat
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